A slight dip in the German GfK consumer confidence index encouraged the Pound Sterling to Euro (GBP/EUR) exchange rate to recover ground and lift itself away from its recent eleven-month low.

While the confidence index remains in positive territory, clocking in at 10.5 rather than 10.6, this sign of easing domestic sentiment failed to impress investors.

As the report from GfK noted:

‘The positive outlook for the consumer economy will only continue as is if the job market remains stable, which is the current assumption, and there are no additional risks threatening from the price front. A further increase in inflation would certainly dampen the consumer climate.’

This left the Euro (EUR) on a generally weaker footing even as hopes of a resolution to trade tensions with the US mounted in the wake of the US-Mexico trade deal.

With price pressures forecast to remain elevated for some time yet the German economy could come under fresh pressure as consumer sentiment sours further.

Worries over the outlook of the Italian economy have also continued to pressure the single currency, with the populist government still on a collision course with EU budget rules.